MARK BARNES: The brave new world will look to the past for answers — and not find them
Future problems will not be solved by remedies from the past. Confronted with an economic disease today, leaders (decision-makers) always revert to medicine that worked before and then they apply that medicine in increasingly dangerous doses. The circumstances that worked then are inevitably not the same as those in place now. Take monetary policy, for instance. Since the 2008 financial crisis central banks, in varying degrees, have been bailing out banks and using government money to make money cheaper for, in particular, those who borrowed to play in the market frenzy and fed it until it burst. The script was predictable but the regulators did it anyway. Why? Because it was popular. In the right circles. Easy and popular never cured anything. In lowering interest rates to zero, central banks didn’t change behaviour, they forgave it. Old remedies are simple antidotes and they always go too far — too much stimulus, too little austerity, whatever — and the pendulum swings too far to ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.